Lending against gold is safe only as long as you know your whole book. How to read your gold loan portfolio, which numbers to watch every week and what to do when the gold rate moves.
One gold loan is easy to understand. You weigh the gold, give a part of its value, and collect interest. A gold loan portfolio — 200, 500 or 2,000 open loans — is a different thing. It can look healthy on the shop floor while quietly carrying risk: a pile of loans that have not paid interest for a year, a few customers holding a big share of your money, or loans that were safe at last month's gold rate and are not safe today.
This post is for jewellers, pawn brokers and small lenders who want to see their whole book clearly.
The five numbers that describe your book
1. Total money out vs. gold held
Start with two totals: how much principal is lent today, and how much gold (by net weight and fine weight) you are holding against it. Put a value on that gold at today's rate.
If you have ₹1.2 crore out and the gold is worth ₹1.8 crore today, your book-level LTV is about 67%. That one figure tells you how much room you have.
2. LTV of each loan at today's rate
The book can look fine while individual loans are not. A loan given at 75% LTV becomes about 82% if the gold rate drops 8%. Sort loans by current LTV and look at the top of the list. Those are the customers to call first.
3. Age of loans
Group open loans by age since the last interest payment:
| Group | What it usually means |
|---|---|
| Paid in the last 3 months | Healthy |
| 3–6 months | Needs a reminder |
| 6–12 months | Needs a call and a plan |
| Over 12 months | Interest is now close to a big part of the loan |
Old loans are the real risk in girvi. Interest keeps adding up, and at some point the customer stops seeing a reason to come back.
4. Interest due
Total interest due across the book, and how much of it is from loans older than six months. Interest due is income only if it is collected.
5. Concentration
What share of your money is with your top 10 customers? If two or three families hold 30% of your book, one bad season for them is a bad season for you.
A weekly routine that takes 20 minutes
- Update the day's gold and silver rate.
- Look at loans with LTV above your limit and call those customers.
- Check the 6–12 month list and send reminders.
- Look at last week's collections compared with interest due.
- Note any big new loans and who approved them.
Once a month, look at the age table and the top-10 concentration, and decide whether your LTV limit or rate needs to change.
When the gold rate moves
Rising rates are pleasant: every loan becomes safer, and customers often come for a top-up. Be careful here — a top-up at a peak rate is the loan most likely to become risky later.
Falling rates are when portfolio management pays for itself. Act early: ask customers with high LTV to pay some principal or interest. Most customers respond well to an early, polite call. Very few respond well to a call after six months of silence.
Doing this on paper vs. in software
You can do all of this with a register and a calculator. It just takes a full day, so it does not happen every week. In gold loan management software, the same view takes a minute: change the rate and the LTV column updates; open the age report and the reminder list is ready.
Whatever tool you use, the habit matters more than the tool. Know your total, know your oldest loans, and look at your book at today's rate, not at the rate on the day you lent.
Try the gold loan calculator to check LTV on a single loan.
